Net sales increased in challenging market conditions

“Environmental awareness and changing energy needs are increasingly steering investments in the markets in which we operate. The industry dynamics are changing, and we have fine-tuned our strategy accordingly. We seek growth by offering innovative and energy efficient lifecycle solutions, as well as by leveraging our leading position in gas based technology. As we enter new market segments, such as Oil & Gas and LNG terminals, and acquire companies that bring new products to our portfolio, the scope of our offering becomes more than simply powering ships or building power plants. Therefore, we have decided to rename our Ship Power and Power Plants businesses Marine Solutions and Energy Solutions.

Supported by growth in service volumes and increased power plant deliveries, Wärtsilä’s second quarter net sales grew by 10% to EUR 1,230 million. I am especially pleased with the development of the Services business; the second quarter saw growth in both order intake and sales, and the market outlook remains positive. Profitability was 11.1% for the second quarter and 10.7% for the first half. In Energy Solutions, delayed decision-making in certain projects affected our order intake. However, our solid project pipeline gives me confidence in improved activity during the second half of the year. The marine markets continue to suffer from weak vessel demand caused primarily by overcapacity, depressed freight rates, and low oil prices. Marine Solutions’ order intake was on a good level despite the challenging market conditions. Still, we must ensure our future competitiveness in a low demand environment. Consequently, we have today announced plans to realign our Marine Solutions organisation.

Our guidance has been updated to reflect the acquisition of L-3 Marine Systems International, which was finalised at the end of May. We now expect net sales growth of 5-10% and profitability to be 12.0-12.5%.”

Björn Rosengren, President and CEO

Wärtsilä's prospects for 2015 revised

Wärtsilä expects its net sales for 2015 to grow by 5-10% and its operational profitability (EBIT% before non-recurring items) to be 12.0-12.5%. The guidance includes the impact of the L-3 Marine Systems International (MSI) acquisition. MSI is expected to contribute approximately EUR 250 million to net sales and EUR 9 million to the operating result during 2015. Excluding purchase price allocation amortisation, MSI’s operating result is estimated to reach EUR 16 million.

Previously Wärtsilä expected its net sales to grow by 0-10% and its operational profitability (EBIT% before non-recurring items) to be 12.0-12.5%, excluding the impact of the MSI acquisition.

Highlights of the review period January-June 2015

Operating result before non-recurring items EUR 237 million, or 10.7% of net sales (EUR 230 million or 10.9%)

Earnings per share 0.97 euro (0.73)

Cash flow from operating activities EUR 84 million (172)

Order book at the end of the period increased 20% to EUR 5,325 million (4,420)

Key figures

MEUR

4-6/2015

4-6/2014

Change

1-6/2015

1-6/2014

Change

2014

Order intake

1 159

1 138

2%

2 443

2 253

8%

5 084

Order book at the end of the period

5 325

4 420

20%

4 530

Net sales

1 230

1 116

10%

2 218

2 113

5%

4 779

Operating result (EBITA)1

144

138

4%

250

243

3%

594

% of net sales

11.7

12.4

11.3

11.5

12.4

Operating result (EBIT)2

137

132

4%

237

230

3%

569

% of net sales

11.1

11.8

10.7

10.9

11.9

Profit before taxes

140

119

18%

222

208

6%

494

Earnings/share, EUR

0.54

0.42

0.97

0.73

1.76

Cash flow from operating activities

47

61

84

172

452

Net interest-bearing debt at the end of the period

495

350

94

Gross capital expenditure

297

42

94

Gearing

0.25

0.19

0.05

1 EBITA is shown excluding non-recurring items and purchase price allocation amortisation. Purchase price allocation amortisation totalled EUR 7 million (6) in the second quarter of 2015 and EUR 13 million (13) in the review period January-June. In 2014, Wärtsilä recognised non-recurring items related to restructuring measures amounting to EUR 9 million in the second quarter and EUR 15 million during the January-June review period.